One of the more colorful of Australia’s politicians was Paul Keating; Treasurer for Australia in the 1980’s who went on to become Prime Minister. Keating was quick witted, one not to mince words, irreverent but unusually dedicated. He publically admitted his lack of economics knowledge when first he became Treasurer and in those early days often looked rather bleary eyed and tired, from all night and early morning sessions poring over the latest treasury forecasts.
Personally I always thought he was a very clear thinker and one of the very few politicians whose communications were fluid and smooth; devoid of the usual irritating ums and arrs or awkward pregnant pauses. He was recently interviewed by Kerry O’Brian of the ABC and if you read the transcript I think you will be surprised by that same style. Click here to read the transcript.
Keating instituted many economic reforms; more so than anyone before or after him as he unshackled our labour and banking practices strangled in regulations and allowed the Australian dollar to float. But his most significant reform was to establish a universal superannuation scheme.
Keating’s grand vision was to encourage every citizen to save for retirement, and in the process create a huge pool of investment capital to enrich the nation. At that time superannuation existed for only about 50 % of the workforce and the remainder relied on somewhat meager government payments of the old age pension. Keating’s idea was the aged pension would become increasingly irrelevant as it was quickly superseded by universal superannuation. His vision was that every citizen would have a post retirement income equivalent to preretirement, paid for from a pension out of each persons superannuation account.
It began with the employer paying in a compulsory 4 %( initially Government funded) for all workers and eventually the minimum guaranteed percentage rose to 9%. Many people personally paid in another 5% or even matched the 9% contribution.
It was Keating’s intention to legislate for the 9 % to be increased to 15% but such intentions was denied after he lost the 1996 federal election and subsequently the elected Liberal Coalition showed no interest in increasing the percentage. Actuarially over a working lifetime, assuming just 15% and investing to give real rates of return you will finish up with sufficient funds to accomplish the goal of self funded retirees.
Superannuation remains unfinished business which hopefully will be rectified by the Rudd Government.